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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q

(Mark one)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended September 30, 2002 or

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____________ to _____________

Commission File Number: 1-9641

IDENTIX INCORPORATED
(Exact name of registrant as specified in its charter)

|                                                                                  |  |                                  
|--------------------------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                                          |  | 94-2842496                       
|                                                                                  |  |                                  
|(State or other jurisdiction of
incorporation of organization)                    |  | (IRS Employer Identification No.)
|                                                                                  |  |                                  
|5600 Rowland Road, Minnetonka, Minnesota
(Address of principal executive offices) |  | 55343
(Zip Code)                 

Registrants telephone number, including area code: (952) 932-0888

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. YES x NO o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date:

85,040,541 shares of Common Stock
as of October 31, 2002

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TABLE OF CONTENTS



|                             |                                                                                              |                                                                                                  |  |  |  |  |  | 
|---------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | Item 1 Unaudited Financial Statements                                                       
|                             |                                                                                              | Condensed Consolidated Balance Sheets  September 30, 2002 and June 30, 2002                    
|                             |                                                                                              | Condensed Consolidated Statements of Operations  Three months ended September 30, 2002 and 2001
|                             |                                                                                              | Condensed Consolidated Statements of Cash Flows  Three months ended September 30, 2002 and 2001
|                             |                                                                                              | Notes to Condensed Consolidated Financial Statements                                            
|                             | Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
|                             | Item 3 Quantitative and Qualitative Disclosures about Market Risk                           
|                             | Item 4 Controls and Procedures                                                              
|                             | PART II OTHER INFORMATION                                                                   
|                             | Item 1 Legal Proceedings                                                                    
|                             | Item 2 Changes in Securities                                                                
|                             | Item 3 Defaults upon Senior Securities                                                      
|                             | Item 4 Submission of Matters to a Vote of Security Holders                                  
|                             | Item 5 Other Information                                                                    
|                             | Item 6 Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                  
|EX-99.1 906 Certifications  



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IDENTIX INCORPORATED

INDEX

|        |  |           |  |                                                                                                  |  |   
|------- |  | --------- |  | ------------------------------------------------------------------------------------------------ |  | --
|PART I  |  |           |  | FINANCIAL INFORMATION                                                                            |  |   
|        |  |           |  |                                                                                                  |  |   
|        |  | Item 1    |  | Unaudited Financial Statements                                                                   |  |   
|        |  |           |  |                                                                                                  |  |   
|        |  |           |  | Condensed Consolidated Balance Sheets -
September 30, 2002 and June 30, 2002                     |  | 3 
|        |  |           |  |                                                                                                  |  |   
|        |  |           |  | Condensed Consolidated Statements of Operations -
Three months ended September 30, 2002 and 2001 |  | 4 
|        |  |           |  |                                                                                                  |  |   
|        |  |           |  | Condensed Consolidated Statements of Cash Flows -
Three months ended September 30, 2002 and 2001 |  | 5 
|        |  |           |  |                                                                                                  |  |   
|        |  |           |  | Notes to Condensed Consolidated Financial Statements                                             |  | 6 
|        |  |           |  |                                                                                                  |  |   
|        |  | Item 2    |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations            |  | 13
|        |  |           |  |                                                                                                  |  |   
|        |  | Item 3    |  | Quantitative and Qualitative Disclosures
about Market Risk                                       |  | 25
|        |  |           |  |                                                                                                  |  |   
|        |  | Item 4    |  | Controls and Procedures                                                                          |  | 26
|        |  |           |  |                                                                                                  |  |   
|PART II |  |           |  | OTHER INFORMATION                                                                                |  |   
|        |  |           |  |                                                                                                  |  |   
|        |  | Item 1    |  | Legal Proceedings                                                                                |  | 27
|        |  |           |  |                                                                                                  |  |   
|        |  | Item 2    |  | Changes in Securities                                                                            |  | 27
|        |  |           |  |                                                                                                  |  |   
|        |  | Item 3    |  | Defaults upon Senior Securities                                                                  |  | 27
|        |  |           |  |                                                                                                  |  |   
|        |  | Item 4    |  | Submission of Matters to a Vote of Security Holders                                              |  | 27
|        |  |           |  |                                                                                                  |  |   
|        |  | Item 5    |  | Other Information                                                                                |  | 27
|        |  |           |  |                                                                                                  |  |   
|        |  | Item 6    |  | Exhibits and Reports on Form 8-K                                                                 |  | 27
|        |  |           |  |                                                                                                  |  |   
|        |  | Signature |  |                                                                                                  |  | 28
|        |  |           |  |                                                                                                  |  |   

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IDENTIX INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

|                                  |                                                                                                                                    |                            |                                      |                                            |             |               |             |              |             |   |             | 
|--------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------ | ------------------------------------------ | ----------- | ------------- | ----------- | ------------ | ----------- | - | ----------- | 
|                                  |                                                                                                                                    |                            |                                      |                                            |             | September 30, |             |              | June 30,    |  
|                                  |                                                                                                                                    |                            |                                      |                                            |             |               |             |              |             |  
|                                  |                                                                                                                                    |                            |                                      |                                            |             | 2002          |             |              | 2002        |  
|                                  |                                                                                                                                    |                            |                                      |                                            |             |               |             |              |             |  
|                                  |                                                                                                                                    |                            |                                      | ASSETS                                     |             |               |             |              |             |   |             | 
|Current assets:                   |                                                                                                                                    |                            |                                      |                                            |             |               |             |             
|                                  | Cash and cash equivalents                                                                                                          |                            | $                                    | 41,332,000                                 |             |               | $           | 53,346,000   |            
|                                  | Marketable securities  short-term                                                                                                 |                            |                                      | 8,209,000                                  |             |               |             | 5,143,000    |            
|                                  | Accounts receivable, net                                                                                                           |                            |                                      | 23,549,000                                 |             |               |             | 19,880,000   |            
|                                  | Inventories                                                                                                                        |                            |                                      | 10,003,000                                 |             |               |             | 11,095,000   |            
|                                  | Prepaid expenses and other assets                                                                                                  |                            |                                      | 2,277,000                                  |             |               |             | 1,412,000    |            
|                                  |                                                                                                                                    |                            |                                      |                                            |             |              
|                                  |                                                                                                                                    | Total current assets       |                                      |                                            | 85,370,000  |               |             |              | 90,876,000  |  
|Marketable securities  long-term |                                                                                                                                    |                            | 7,244,000                            |                                            |             |               | 10,269,000  |             
|Property and equipment, net       |                                                                                                                                    |                            | 6,153,000                            |                                            |             |               | 6,243,000   |             
|Goodwill                          |                                                                                                                                    |                            | 295,744,000                          |                                            |             |               | 295,744,000 |             
|Acquired intangible assets, net   |                                                                                                                                    |                            | 23,491,000                           |                                            |             |               | 25,037,000  |             
|Other assets                      |                                                                                                                                    |                            | 2,350,000                            |                                            |             |               | 3,086,000   |             
|                                  |                                                                                                                                    |                            |                                      |                                            |             |              
|                                  |                                                                                                                                    |                            |                                      | Total assets                               |             | $             | 420,352,000 |              |             | $ | 431,255,000 | 
|                                  |                                                                                                                                    |                            |                                      |                                            |             |              
|                                  |                                                                                                                                    |                            | LIABILITIES AND STOCKHOLDERS EQUITY |                                            |             |               |             |              |             |   |            
|Current liabilities:              |                                                                                                                                    |                            |                                      |                                            |             |               |             |             
|                                  | Accounts payable                                                                                                                   |                            | $                                    | 9,641,000                                  |             |               | $           | 10,727,000   |            
|                                  | Accrued compensation                                                                                                               |                            |                                      | 5,582,000                                  |             |               |             | 6,082,000    |            
|                                  | Other accrued liabilities                                                                                                          |                            |                                      | 5,278,000                                  |             |               |             | 4,032,000    |            
|                                  | Deferred revenue                                                                                                                   |                            |                                      | 7,432,000                                  |             |               |             | 6,796,000    |            
|                                  |                                                                                                                                    |                            |                                      |                                            |             |              
|                                  |                                                                                                                                    | Total current liabilities  |                                      |                                            | 27,933,000  |               |             |              | 27,637,000  |  
|Deferred revenue                  |                                                                                                                                    |                            | 568,000                              |                                            |             |               | 741,000     |             
|Other liabilities                 |                                                                                                                                    |                            | 11,341,000                           |                                            |             |               | 9,554,000   |             
|                                  |                                                                                                                                    |                            |                                      |                                            |             |              
|                                  |                                                                                                                                    | Total liabilities          |                                      |                                            | 39,842,000  |               |             |              | 37,932,000  |  
|                                  |                                                                                                                                    |                            |                                      |                                            |             |              
|Stockholders equity:             |                                                                                                                                    |                            |                                      |                                            |             |               |             |             
|                                  | Convertible preferred stock, $0.01 par value;
2,000,000 shares authorized; 234,558 shares issued and
outstanding                   |                            |                                      | 3,702,000                                  |             |               |             | 3,702,000    |            
|                                  | Common stock, $0.01 par value; 200,000,000 shares authorized
85,014,811 and 84,651,058 shares issued and outstanding,
respectively |                            |                                      | 850,000                                    |             |               |             | 846,000      |            
|                                  | Additional paid-in capital                                                                                                         |                            |                                      | 533,278,000                                |             |               |             | 532,738,000  |            
|                                  | Accumulated deficit                                                                                                                |                            |                                      | (155,476,000                               | )           |               |             | (141,277,000 | )          
|                                  | Deferred stock-based compensation                                                                                                  |                            |                                      | (1,955,000                                 | )           |               |             | (2,540,000   | )          
|                                  | Accumulated other comprehensive gain (loss)                                                                                        |                            |                                      | 111,000                                    |             |               |             | (146,000     | )          
|                                  |                                                                                                                                    |                            |                                      |                                            |             |              
|                                  |                                                                                                                                    | Total stockholders equity |                                      |                                            | 380,510,000 |               |             |              | 393,323,000 |  
|                                  |                                                                                                                                    |                            |                                      |                                            |             |              
|                                  |                                                                                                                                    |                            |                                      | Total liabilities and stockholders equity |             | $             | 420,352,000 |              |             | $ | 431,255,000 | 
|                                  |                                                                                                                                    |                            |                                      |                                            |             |              

The accompanying notes are an integral part of these consolidated financial statements.

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IDENTIX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                                                    |                                      |                                                            |                          |       |                                  |            |            |       |            |            | 
|----------------------------------------------------------------------------------- | ------------------------------------ | ---------------------------------------------------------- | ------------------------ | ----- | -------------------------------- | ---------- | ---------- | ----- | ---------- | ---------- | 
|                                                                                    |                                      |                                                            |                          |       | Three Months Ended September 30, |           
|                                                                                    |                                      |                                                            |                          |       |                                  |           
|                                                                                    |                                      |                                                            |                          |       | 2002                             |            |            | 2001  |           
|                                                                                    |                                      |                                                            |                          |       |                                  |            |            |       |           
|Revenues:                                                                           |                                      |                                                            |                          |       |                                  |            |            |      
|                                                                                    |                                      | Product revenues                                           |                          | $     | 14,152,000                       |            |            | $     | 6,056,000  |           
|                                                                                    |                                      | Services revenues                                          |                          |       | 10,910,000                       |            |            |       | 10,708,000 |           
|                                                                                    |                                      |                                                            |                          |       |                                  |           
|                                                                                    |                                      |                                                            | Total revenues           |       |                                  | 25,062,000 |            |       |            | 16,764,000 | 
|                                                                                    |                                      |                                                            |                          |       |                                  |           
|Cost and expenses:                                                                  |                                      |                                                            |                          |       |                                  |            |            |      
|                                                                                    |                                      | Cost of product revenues                                   |                          |       | 10,305,000                       |            |            |       | 4,088,000  |           
|                                                                                    |                                      | Cost of services revenues                                  |                          |       | 9,844,000                        |            |            |       | 9,930,000  |           
|                                                                                    |                                      | Research, development and engineering                      |                          |       | 3,088,000                        |            |            |       | 2,613,000  |           
|                                                                                    |                                      | Marketing and selling                                      |                          |       | 3,251,000                        |            |            |       | 3,451,000  |           
|                                                                                    |                                      | General and administrative                                 |                          |       | 4,883,000                        |            |            |       | 3,528,000  |           
|                                                                                    |                                      | Amortization of acquired intangible assets                 |                          |       | 1,546,000                        |            |            |       | 233,000    |           
|                                                                                    |                                      | Restructuring, write-offs and other merger related charges |                          |       | 6,755,000                        |            |            |       | 1,712,000  |           
|                                                                                    |                                      |                                                            |                          |       |                                  |            |            |      
|                                                                                    |                                      |                                                            | Total costs and expenses |       |                                  | 39,672,000 |            |       |            | 25,555,000 | 
|                                                                                    |                                      |                                                            |                          |       |                                  |           
|Loss from operations                                                                |                                      |                                                            | (14,610,000              | )     |                                  |            | (8,791,000 | )    
|Interest and other income (expense), net                                            |                                      |                                                            | 374,000                  |       |                                  |            | 222,000    |      
|Interest expense                                                                    |                                      |                                                            | 1,000                    |       |                                  |            |           |      
|                                                                                    |                                      |                                                            |                          |       |                                  |           
|Loss before income taxes and equity interest in income of
joint venture             |                                      |                                                            | (14,235,000              | )     |                                  |            | (8,569,000 | )    
|(Provision) benefit for income taxes                                                |                                      |                                                            | (22,000                  | )     |                                  |            | 1,000      |      
|                                                                                    |                                      |                                                            |                          |       |                                  |           
|Loss before equity interest in income of joint venture                              |                                      |                                                            | (14,257,000              | )     |                                  |            | (8,568,000 | )    
|Equity interest in income of joint venture                                          |                                      |                                                            | 58,000                   |       |                                  |            | 92,000     |      
|                                                                                    |                                      |                                                            |                          |       |                                  |           
|Net loss                                                                            |                                      | $                                                          | (14,199,000              | )     |                                  | $          | (8,476,000 | )    
|                                                                                    |                                      |                                                            |                          |       |                                  |           
|                                                                                    | Basic and diluted net loss per share |                                                            | $                        | (0.17 | )                                |            | $          | (0.23 | )         
|                                                                                    |                                      |                                                            |                          |       |                                  |           
|Weighted average common shares used in basic
and diluted loss per share computation |                                      |                                                            | 84,801,000               |       |                                  |            | 36,629,000 |      

The accompanying notes are an integral part of these consolidated financial statements.

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IDENTIX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                              |                                                                             |                                                     |             |                                  |            |   |            |            |            |  
|--------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------------- | ----------- | -------------------------------- | ---------- | - | ---------- | ---------- | ---------- | -
|                                              |                                                                             |                                                     |             | Three Months Ended September 30, |           
|                                              |                                                                             |                                                     |             |                                  |           
|                                              |                                                                             |                                                     |             | 2002                             |            |   | 2001       |           
|                                              |                                                                             |                                                     |             |                                  |            |   |            |           
|Cash flows from operating activities:         |                                                                             |                                                     |             |                                  |            |   |            |           
|                                              | Net loss                                                                    |                                                     | $           | (14,199,000                      | )          |   | $          | (8,476,000 | )         
|                                              | Adjustments to reconcile net loss to net cash used in operating
activities: |                                                     |             |                                  |            |   |            |            |           
|                                              |                                                                             | Depreciation and amortization                       |             |                                  | 2,090,000  |   |            |            | 862,000    |  
|                                              |                                                                             | Gain on disposal of property and equipment          |             |                                  |           |   |            |            | 44,000     |  
|                                              |                                                                             | Equity interest in income of joint venture          |             |                                  | (58,000    | ) |            |            | (92,000    | )
|                                              |                                                                             | Stock-based compensation expenses                   |             |                                  | 585,000    |   |            |            | 254,000    |  
|                                              |                                                                             | Amortization of premiums on marketable securities   |             |                                  | 85,000     |   |            |            |           |  
|                                              |                                                                             | Bad debt expense                                    |             |                                  | 148,000    |   |            |            | 25,000     |  
|                                              |                                                                             | Non-cash restructuring write-offs and other charges |             |                                  | 65,000     |   |            |            |           |  
|                                              | Changes in assets and liabilities, net of effects of acquisition:           |                                                     |             |                                  |            |   |            |            |           
|                                              |                                                                             | Accounts receivable                                 |             |                                  | (3,817,000 | ) |            |            | 4,049,000  |  
|                                              |                                                                             | Inventories                                         |             |                                  | 1,092,000  |   |            |            | (1,052,000 | )
|                                              |                                                                             | Prepaid expenses and other assets                   |             |                                  | 60,000     |   |            |            | (214,000   | )
|                                              |                                                                             | Accounts payable                                    |             |                                  | (1,086,000 | ) |            |            | (2,707,000 | )
|                                              |                                                                             | Accrued compensation                                |             |                                  | (500,000   | ) |            |            | (22,000    | )
|                                              |                                                                             | Other accrued liabilities                           |             |                                  | 2,968,000  |   |            |            | 407,000    |  
|                                              |                                                                             | Deferred revenue                                    |             |                                  | 463,000    |   |            |            | (346,000   | )
|                                              |                                                                             |                                                     |             |                                  |            |  
|                                              | Net cash used in operating activities                                       |                                                     |             | (12,104,000                      | )          |   |            | (7,268,000 | )         
|                                              |                                                                             |                                                     |             |                                  |            |  
|Cash flows from investing activities:         |                                                                             |                                                     |             |                                  |            |   |            |           
|                                              | Capital expenditures                                                        |                                                     |             | (454,000                         | )          |   |            | (1,523,000 | )         
|                                              | Proceeds from the sale of property and equipment                            |                                                     |             |                                 |            |   |            | 7,000      |           
|                                              | Additions in intangibles and other assets                                   |                                                     |             |                                 |            |   |            | (30,000    | )         
|                                              |                                                                             |                                                     |             |                                  |            |   |           
|                                              | Net cash used in investing activities                                       |                                                     |             | (454,000                         | )          |   |            | (1,546,000 | )         
|                                              |                                                                             |                                                     |             |                                  |            |  
|Cash flows from financing activities:         |                                                                             |                                                     |             |                                  |            |   |            |           
|                                              | Proceeds from sales of common and preferred stock                           |                                                     |             | 544,000                          |            |   |            | 115,000    |           
|                                              |                                                                             |                                                     |             |                                  |            |   |           
|                                              | Net cash provided by financing activities                                   |                                                     |             | 544,000                          |            |   |            | 115,000    |           
|                                              |                                                                             |                                                     |             |                                  |            |  
|Net decrease in cash and cash equivalents     |                                                                             |                                                     | (12,014,000 | )                                |            |   | (8,699,000 | )         
|Cash and cash equivalents at period beginning |                                                                             |                                                     | 53,346,000  |                                  |            |   | 20,777,000 |           
|                                              |                                                                             |                                                     |             |                                  |            |  
|Cash and cash equivalents at period end       |                                                                             | $                                                   | 41,332,000  |                                  |            | $ | 12,078,000 |           
|                                              |                                                                             |                                                     |             |                                  |            |  

The accompanying notes are an integral part of these consolidated financial statements.

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IDENTIX INCORPORATED
THREE MONTHS ENDED SEPTEMBER 30, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



|1. |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | These accompanying condensed consolidated financial statements and related
notes are unaudited. However, in the opinion of management, all adjustments
(consisting only of normal recurring adjustments), which are necessary for a
fair presentation of the financial position and results of operations for the
interim periods presented, have been included. These condensed consolidated
financial statements should be read in conjunction with the audited condensed
consolidated financial statements and notes thereto for the fiscal year ended
June 30, 2002 included in the Identix Incorporated Form 10-K. Identix
Incorporated is hereinafter referred to as Identix or the Company. The
results of operations for the three months ended September 30, 2002 are not
necessarily indicative of results to be expected for the entire fiscal year,
which ends on June 30, 2003.                                                                                                                                                                                                                                                                     
|  
|2. |  | Revenue Recognition Policy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | The Company recognizes revenues in accordance with the provisions of the
Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 101,
Revenue Recognition in Financial Statements and of the American Institute
of Certified Public Accountants Statement of Position (SOP) 97-2, Software
Revenue Recognition, as amended by SOP 98-4 and SOP 98-9, as well as
Technical Practice Aids issued from time to time by the American Institute of
Certified Public Accountants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | The Companys product revenue is derived from the sale of equipment and
software. Certain of the Companys equipment sales such as its Live Scan
Systems generally require installation and training subsequent to shipment
and transfer of title. Product revenue related to equipment sales that
require installation is deferred until installation is complete and customer
acceptance has been obtained. Revenue related to product sales that require
no installation such as printers and other peripheral devices as well as
certain security products including DFR-300, DFR-200 and FingerScan V20 are
recognized in accordance with the terms of the sale, generally upon shipment
by the Company, provided no significant obligations remain and collection of
the receivable is deemed reasonably assured. Revenues from sales of products
via authorized representatives, dealers, distributors or other third party
sales channels are recognized at the time the risks and rewards have
transferred or, in the case of Live Scan Systems that generally require
installation, upon the final installation, training and acceptance from the
end user.
|  
|   |  | The Company also sells several stand-alone software products including
BioLogon and software developer kits. The Company recognizes revenue on
software products when persuasive evidence of an arrangement exists, delivery
has occurred, the vendors fee is fixed or determinable and vendor-specific
objective evidence (VSOE) of fair value exists to allocate the total fee to all
undelivered elements of the arrangement and collection is determined to be
probable. VSOE is established based upon either sales of the element (e.g.
maintenance, training or consulting) in individual transactions, or, in
certain cases for maintenance, based upon substantive renewal rates. In
cases where the Company does not have VSOE for all delivered elements in the
transaction (e.g., for licenses), the fees from these multiple-element
agreements are allocated using the residual value method. Maintenance
revenue is deferred and recognized rateably over the life of the service
period of the related agreement.                                                                                                                                 
|  
|   |  | The majority of the Companys services are performed for the U.S. Government
under various firm fixed-price (FFP), time-and-material (T&M) and cost
reimbursement contracts. Revenues on FFP contracts are generally recognized
on the percentage-of-completion method based on costs incurred in relation to
total estimated costs. Revenues on T&M contracts are recognized to the
extent of billable rates multiplied by hours worked plus materials expense
incurred. Revenues for cost plus fixed fee (CPFF) contracts are recognized
as costs are incurred, including a proportionate amount of the fee earned.
Unbilled accounts receivable represent revenue accrued which becomes billable
per the terms of contract. Provisions for estimated contract losses are
recorded in the period such losses are determined.                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | Services revenues directly from contracts with the U.S. Government,
principally with the Department of Defense (DOD), and from subcontracts
with other U.S. Government contractors, were approximately 85% and 88% of
total services revenue for the three months ending September 30, 2002 and
2001. Contract costs for services revenues to the U.S. Government, including
indirect expenses, are subject to audit and subsequent adjustment by
negotiation between the Company and U.S. Government representatives.
Revenues are recorded in amounts expected to be realized upon final                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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|   |  | settlement. Identix Public Sector (IPS) is currently being audited by the
Defense Contract Audit Agency for the period from July 1, 1997 to June 30,
2000. While the Company believes that the results of such audit will have no
material effect on the Companys financial position or results of operations,
there can be no assurance that no adjustment will be made and that, if made,
such adjustments will not have a material effect on the Companys financial
position or results of operations.                                                                                                                                                                                                                                                                                             
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|3. |  | Cash and Liquidity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | The Company financed its operations during the three months ended September
30, 2002 primarily from its existing working capital at June 30, 2002. As of
September 30, 2002, the Companys principal sources of liquidity consisted of
$57,437,000 of working capital, including $49,541,000 in cash and cash
equivalents and short-term marketable securities. The Company also
has $11,792,000 available for future borrowings under the Companys bank lines of
credit.                                                                                                                                                                                                                                                                                                                                
|  
|   |  | At September 30, 2002,
the Company has two lines of credit. The Companys
first line of credit (the Identix Line of Credit) was entered into in
September 2001 and was amended on March 28, 2002. This line of credit
provides for up to the lesser of $15,000,000 or 80% of the Companys eligible
product accounts receivable and 85% of IPS eligible accounts receivable.
Borrowings under the Identix Line of Credit are collateralized by substantially all
of the assets of the Company and bear interest at the banks prime rate of
interest plus 50 basis points (5.25% at September 30, 2002). The Identix
Line of Credit expires on March 28, 2003. At September 30, 2002, there were
no amounts outstanding under this line of credit and approximately
$9,792,000 was available to borrow.
|  
|   |  | The Companys second line of credit (the Visionics Line of Credit), which
was established by Visionics Corporation (Visionics), a wholly owned
subsidiary of the Company, is an inventory and receivables based line of
credit for the lesser of eligible inventory and accounts receivables or
$2,000,000. Borrowings under the Visionics Line of Credit are
collateralized  by
Visionics inventory and accounts receivable. The Visionics Line of Credit
bears interest at the banks prime rate of interest plus 50 basis points
(5.25% at September 30, 2002). The line of credit will expire on March 30,
2003. At September 30, 2002 there were no amounts outstanding under this
line of credit and $2,000,000 was available to borrow.                                                       
|  
|   |  | The Identix Line of Credit and the Visionics Line of Credit agreements
contain financial and operating covenants, including restrictions on the
Companys ability to pay dividends on its common stock. At September 30,
2002, the Company was in compliance with such covenants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|4. |  | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | Inventories are stated at the lower of standard cost (which approximates
actual cost determined on a first-in, first-out method) or market and
consisted of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                                 |  |               |            |  |          |   |            | 
|-------------------------------- |  | ------------- | ---------- |  | -------- | - | ---------- | 
|                                 |  | September 30, |            |  | June 30, |  
|                                 |  |               |            |  |          |  
|                                 |  | 2002          |            |  | 2002     |  
|                                 |  |               |            |  |          |  
|Purchased parts and materials    |  | $             | 3,761,000  |  |          | $ | 4,190,000  | 
|Work-in-process                  |  |               | 5,172,000  |  |          |   | 4,956,000  | 
|Finished goods, including spares |  |               | 1,070,000  |  |          |   | 1,949,000  | 
|                                 |  |               |            |  |          |  
|                                 |  | $             | 10,003,000 |  |          | $ | 11,095,000 | 
|                                 |  |               |            |  |          |  



|5. |  | Restructuring, Write-offs and Other Merger Related Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Fiscal 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | During the three months ended September 30, 2002, the Company recorded merger
related expenses totaling $3,171,000 that consisted of $1,826,000 in
relocation costs and $1,345,000 related to employees with extended
terminations to assist in the integration. Such costs are expensed as
incurred.                                                                                                                                                                                                                                                                                              
|  
|   |  | During the three months ended September 30, 2002, the Company recorded a loss
of $3,766,000 on the sublease of a portion of its Fairfax, Virginia facility.
The loss represented the difference between the remaining lease obligation
of $5,222,000, abandoned property and equipment of $445,000 and costs to
sublet the facility of $375,000, and the sublease income of $2,276,000.
During the three months ended September 30, 2002, the Company recorded income
of $182,000 through the reversal of a reserve relating to the shut down of
the Companys Virginia Beach-based Law Enforcement

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| |  | Solutions Division (LESD) group as the actual costs to dispose of the
division were less than estimated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Fiscal 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | In June 2001, the Company initiated a restructuring of its worldwide
operations to reduce costs and increase operational efficiencies. In
connection with the restructuring, in July 2001, the Company initiated a
workforce reduction of approximately 42 employees, or 10% of its workforce to
streamline its worldwide functions, operations and resources primarily in
marketing, selling and administration. The workforce reduction resulted in a
$1,712,000 charge during the quarter ended September 30, 2001 relating
primarily to severance and fringe benefits. Related cash payments of
$992,000 were made during the three months ended September 30,
2001. The
remaining liability at September 30, 2001 of $720,000 was included in accrued
compensation in the condensed consolidated balance sheets.
|
| |  | The following table represents
a summary of restructuring, write-offs and other merger
related charges:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                |       |   |                 |            |  |           |           |           |                  |   |         |               |  |   |                    |          
|------------------------------- | ----- | - | --------------- | ---------- |  | --------- | --------- | --------- | ---------------- | - | ------- | ------------- |  | - | ------------------ | ---------
|                                |       |   | Restructuring   |            |  |           |           |           |                  |   |         |               |  |   |                    |          
|                                |       |   | Liability as
of |            |  |           |           |           |                  |   |         |               |  |   |                    |          
|                                |       |   | June 30, 2002   |            |  | Additions |           |           | Non-Cash Charges |   |         | Cash Payments |  |   | September 30, 2002
|                                |       |   |                 |            |  |           |           |           |                  |   |         |               |  |   |                   
|Severance and benefits          |       | $ | 2,493,000       |            |  | $         | 1,345,000 |           |                  | $ |        |               |  | $ | 2,251,000          |          
|Lease exit costs                |       |   | 10,340,000      |            |  |           | 3,766,000 |           |                  |   | 247,000 |               |  |   | 371,000            |          
|Internal merger costs and other |       |   | 814,000         |            |  |           | 1,644,000 |           |                  |   |        |               |  |   | 2,359,000          |          
|                                |       |   |                 |            |  |           |           |           |                  |   |         |               |  |  
|                                | Total |   | $               | 13,647,000 |  |           | $         | 6,755,000 |                  |   | $       | 247,000       |  |   | $                  | 4,981,000
|                                |       |   |                 |            |  |           |           |           |                  |   |         |               |  |  



|6. |  | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Basic earnings per share are computed by dividing net income (loss) available
to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per share gives effect to all
dilutive potential common shares outstanding during the period, including
convertible preferred stock as well as stock options and warrants, using the
treasury stock method.                                                                                                     
|  
|   |  | Options and warrants to purchase 9,975,937 and 7,255,344 shares of common
stock were outstanding at September 30, 2002 and 2001, respectively, but were
not included in the computation of diluted net loss per share as their effect
was anti-dilutive. Also 234,558 shares of convertible preferred stock were
outstanding at September 30, 2002 and are convertible into 235,553 shares of
common stock, but were not included in the computation of diluted net loss
per share as their effect was anti-dilutive.
|  
|7. |  | Comprehensive Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | Comprehensive loss for the three months ended September 30, 2002 and 2001 was
$13,942,000 and $8,476,000 respectively.                                                                                                                                                                                                                                                                                                                                                                                               

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|8. |  | Unaudited Pro Forma Information                                                                                                                                                                                                                                                            
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The following table presents the consolidated results of operations on an
unaudited pro forma basis, excluding the charge for acquired in-process
research and development, as if the June 2002 merger with Visionics Corporation had
taken place at the beginning of the period presented:

|                                                                   |  |               |            |  
|------------------------------------------------------------------ |  | ------------- | ---------- | -
|                                                                   |  | September 30, |           
|                                                                   |  |               |           
|                                                                   |  | 2001          |           
|                                                                   |  |               |           
|Revenues                                                           |  | $             | 24,923,000 |  
|Net Loss                                                           |  |               | (9,043,000 | )
|Loss per share  basic and diluted                                 |  | $             | (0.12      | )
|Common shares used in basic and diluted loss
per share computation |  |               | 76,051,000 |  



| |  | The unaudited pro forma results of operations are for comparative purposes
only and do not necessarily reflect the results that would have occurred had
the merger occurred at the beginning of the period presented or the results
which may occur in the future. These pro forma amounts are not necessarily
indicative of the results that would have been obtained if the merger had
occurred as of the beginning of the period presented or that may occur in the
future.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|9. |  | Reportable Segment Data                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company has determined that its reportable segments are those based on
its method of internal reporting. The Companys reportable segments are
Products and Services. The Companys reportable segments are
strategic business units that offer different products and services and include
inter-segment revenues, corporate allocations and administrative expenses.
Revenues are attributed to the reportable segment of the sales or service
organizations, and costs directly and indirectly incurred in generating
revenues are similarly assigned.

|                      |          |   |                                  |             |   |      |            |            |  
|--------------------- | -------- | - | -------------------------------- | ----------- | - | ---- | ---------- | ---------- | -
|                      |          |   | Three Months Ended September 30, |            
|                      |          |   |                                  |            
|                      |          |   | 2002                             |             |   | 2001 |           
|                      |          |   |                                  |             |   |      |           
|Total revenues:       |          |   |                                  |             |   |      |            |           
|                      | Product  |   | $                                | 14,152,000  |   |      | $          | 6,056,000  |  
|                      | Services |   |                                  | 10,910,000  |   |      |            | 10,708,000 |  
|                      |          |   |                                  |             |   |     
|                      |          | $ | 25,062,000                       |             |   | $    | 16,764,000 |           
|                      |          |   |                                  |             |   |     
|Loss
from operations: |          |   |                                  |             |   |      |            |           
|                      | Product  |   | $                                | (10,677,000 | ) |      | $          | (7,660,000 | )
|                      | Services |   |                                  | (3,933,000  | ) |      |            | (1,131,000 | )
|                      |          |   |                                  |             |   |     
|                      |          | $ | (14,610,000                      | )           |   | $    | (8,791,000 | )         
|                      |          |   |                                  |             |   |     

|                     |          |   |               |             |  |          |             |             | 
|-------------------- | -------- | - | ------------- | ----------- |  | -------- | ----------- | ----------- | 
|                     |          |   | September 30, |             |  | June 30, |            
|                     |          |   |               |             |  |          |            
|                     |          |   | 2002          |             |  | 2002     |            
|                     |          |   |               |             |  |          |            
|Identifiable assets: |          |   |               |             |  |          |             |            
|                     | Product  |   | $             | 408,961,000 |  |          | $           | 419,689,000 | 
|                     | Services |   |               | 11,391,000  |  |          |             | 11,566,000  | 
|                     |          |   |               |             |  |         
|                     |          | $ | 420,352,000   |             |  | $        | 431,255,000 |            
|                     |          |   |               |             |  |         

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|10. |  | Foreign Operations Data                                                                                                
|--- |  | -----------------------------------------------------------------------------------------------------------------------
|   
|    |  | In geographical reporting, revenues are attributed to the geographical
location of the sales and service organizations:

|                |               |   |                                  |            |  |      |            |            | 
|--------------- | ------------- | - | -------------------------------- | ---------- |  | ---- | ---------- | ---------- | 
|                |               |   | Three Months Ended September 30, |           
|                |               |   |                                  |           
|                |               |   | 2002                             |            |  | 2001 |           
|                |               |   |                                  |            |  |      |           
|Total revenues: |               |   |                                  |            |  |      |            |           
|                | North America |   | $                                | 24,310,000 |  |      | $          | 16,424,000 | 
|                | International |   |                                  | 752,000    |  |      |            | 340,000    | 
|                |               |   |                                  |            |  |      |           
|                |               | $ | 25,062,000                       |            |  | $    | 16,764,000 |           
|                |               |   |                                  |            |  |     

|                     |               |   |               |             |  |          |             |             | 
|-------------------- | ------------- | - | ------------- | ----------- |  | -------- | ----------- | ----------- | 
|                     |               |   | September 30, |             |  | June 30, |            
|                     |               |   |               |             |  |          |            
|                     |               |   | 2002          |             |  | 2002     |            
|                     |               |   |               |             |  |          |            
|Identifiable assets: |               |   |               |             |  |          |             |            
|                     | North America |   | $             | 419,499,000 |  |          | $           | 430,431,000 | 
|                     | International |   |               | 853,000     |  |          |             | 824,000     | 
|                     |               |   |               |             |  |          |            
|                     |               | $ | 420,352,000   |             |  | $        | 431,255,000 |            
|                     |               |   |               |             |  |         

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|11. |  | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Effective July 1, 2002, the Company adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. This statement addresses
financial accounting and reporting for the impairment of long-lived assets
and for long-lived assets to be disposed of and supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of and APB Opinion No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions.
The adoption did not have a material impact on its financial position and
results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | In June 2002, the FASB issued SFAS No. 146, Accounting for Exit or Disposal
Activities. SFAS 146 addresses significant issues regarding the recognition,
measurement, and reporting of costs that are associated with exit and
disposal activities, including restructuring activities that are currently
accounted for under EITF No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). The scope of SFAS 146 also
includes costs related to terminating a contract that is not a capital lease
and termination benefits that employees who are involuntarily terminated
receive under the terms of a one-time benefit arrangement that is not an
ongoing benefit arrangement or an individual deferred-compensation contract.
SFAS 146 will be effective for exit or disposal activities that are initiated
after December 31, 2002 but early application is encouraged. The provisions
of EITF No. 94-3 shall continue to apply for an exit activity initiated under
an exit plan that met the criteria of EITF No. 94-3 prior to the adoption of
SFAS 146. Adopting the provisions of SFAS 146 will change, on a prospective
basis, the timing of when restructuring charges are recorded from a
commitment date approach to when the liability is incurred.
|   
|12. |  | Subsequent Event                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | In October 2002, the Company obtained exclusive ownership of the source code
and core technology underlying certain software from Keyware Technologies NV
for $500,000. The software will add to an overall identity management system
that allows for the central management of the authentication process on a
secure user basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Item 2.

The statements in this report on Form 10-Q that relate to future plans,
events, or performance are forward-looking statements. Actual results, events
and performance may differ materially due to a variety of factors including the
factors described under Risk Factors below. The Company undertakes no
obligation to publicly update these forward-looking statements to reflect
events or circumstances that occur after the date hereof or to reflect the
occurrence of unanticipated events.

OVERVIEW

Identix Incorporated (Identix or the Company) provides a broad range
of fingerprint and facial recognition technology offerings that empower the
identification of individuals who wish to gain access to information or
facilities, conduct transactions and obtain identifications. Additionally, the
Companys products and solution offerings can help identify those who
perpetrate fraud and otherwise pose a threat to public safety. Identix
products serve a broad range of industries and market segments  most notably,
government and law enforcement, aviation, financial, healthcare and corporate
enterprise. A world leader in multi-biometric technology, Identix believes it
has more fingerprint and facial biometric installations worldwide than any
other company. The Company also provides public sector services through
Identix Public Sector, Inc. (IPS), a wholly owned subsidiary of the Company.

On June 25, 2002, the
Company completed its merger with Visionics Corporation
(Visionics), a leading provider of biometric technologies
and identification information systems. As the Companys merger
with Visionics was consummated on June 25, 2002, the Companys
consolidated statements of operations for the fourth quarter and year
ended June 30, 2002, reflect Visionics results of operations
for the final three business days of June 2002. In connection with
this stock-for-stock merger transaction, each outstanding share of
Visionics common stock was exchanged for 1.3436 shares of the
Companys, resulting in the issuance of an aggregate of 39,422,000
shares of the Companys common stock for all outstanding shares
of Visionics common stock. In addition, all options and warrants to
purchase shares of Visionics common stock outstanding immediately
prior to the consummation of the merger were converted into options
and warrants to purchase 3,860,000 shares of the Companys
common stock. The total purchase price was $334,818,000.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
requires management to make judgments, assumptions and estimates that affect
the amounts reported in the Consolidated Financial Statements and accompanying
notes. Note 1 to the Consolidated Financial Statements in the Companys Annual
Report on Form 10-K for the fiscal year ended June 30, 2002 describes the
significant accounting policies and methods used in the preparation of the
Consolidated Financial Statements. Estimates are used for, but not limited to,
the accounting for the allowance for doubtful accounts and sales returns,
goodwill impairments, inventory allowances, warranty costs, revenue recognition
as well as loss contingencies and restructurings. Actual results could differ
from these estimates. Managements Discussion and Analysis of Financial
Condition and Results of Operations in the Companys Annual Report on Form 10-K
for the fiscal year ended June 30, 2002 describes the critical accounting
policies that are impacted significantly by judgments, assumptions and
estimates used in the preparation of the Consolidated Financial Statements.

RESULTS OF OPERATIONS

Revenues

Revenues for the three months ended September 30, 2002 were $25,062,000
compared to $16,764,000 for the same period in the prior fiscal year. The
increase in revenues of 49% for the three months ended September 30, 2002 was
primarily due to an increase in product sales resulting from the Visionics
merger and an increase in government services sales. For a comparable
period last year Visionics revenue was $8,159,000. For the three months
ended September 30, 2002 and 2001, the Company had one customer, the DOD, which
accounted for 29% and 47%, respectively, of total revenue.

Product revenues were
$14,152,000 for the three months ended September 30,
2002, compared to $6,056,000 for the same period in the prior fiscal year. The
increase in product revenue of 134% for the three months ended September 30,
2002 was primarily due to the Visionics merger, including particular strength
in the Companys live scan product line. For a comparable
period last year Visionics revenue was $8,159,000.

International sales accounted for $752,000 or 5% of the Companys product
revenues for the three months ended September 30, 2002 compared to $340,000 or 6% for the same period in the
prior fiscal year. The increase in international sales for the three months
ended September 30, 2002 was due to increased sale of products in Europe. The
Companys international sales are predominately denominated in U.S. dollars,
and the Company actively monitors its foreign currency exchange exposure and,
if significant, will take action to reduce foreign exchange risk. To date, the
Company has not entered into any hedging transactions.

13



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Services revenues
were $10,910,000 for the three months ended September
30, 2002 up 2% when compared to $10,708,000 for the same period in the prior
fiscal year. The majority of the Companys services revenues are generated
directly from contracts with the U.S. Government, principally the DOD. For the
three months ended September 30, 2002, revenues directly from the DOD and from
other U. S. Government agencies accounted for 85% of the Companys total
services revenues compared to 88% for the same period in the prior fiscal
year. Services revenues were not impacted by the merger with
Visionics.

The Companys services business generates a significant amount of its
revenues from firm fixed-price (FFP) contracts and from time-and-materials
(T&M) contracts. During the three months ended
September 30, 2002 and 2001, the
Company derived 93% and 90%, respectively, of services revenues from FFP and
T&M and contracts. FFP contracts provide for a fixed price for stipulated
services or products, regardless of the costs incurred, which may result in
losses from cost overruns. T&M contracts typically provide for payment of
negotiated hourly rates for labor incurred plus reimbursement of other
allowable direct and indirect costs. The Company assumes greater performance
risk on T&M and FFP contracts and the failure to accurately estimate ultimate
costs or to control costs during performance of the work can result in reduced
profit margins or losses. There can be no assurance that the Companys
services business will not incur cost overruns for any FFP and T&M contracts it
is awarded. The Companys services business also generates revenues from cost
plus fixed fee (CPFF) contracts, which accounted for
approximately 7% and
10%, respectively, of its services revenues for the three months ended
September 30, 2002 and 2001. CPFF contracts provide for the reimbursement of
allowable costs, including indirect costs plus a fee or profit. Revenues
generated from contracts with government agencies are subject to audit and
subsequent adjustment by negotiation between the Company and representatives of
such government agencies. IPS is currently being audited by the Defense
Contract Audit Agency for the period from July 1, 1997 to June 30, 2000. While
the Company believes that the results of such audits will have no material
effect on the Companys financial position or results of operations, there can
be no assurance that no adjustments will be made and that, if made, such
adjustments will not have a material effect on the Companys financial
position, results of operations, or cash flows.

Gross margin on
product revenues was 27% for the three months ended
September 30, 2002 and 33% for the three months ended September 30, 2001. The
decrease in product gross margin for the three months ended September 30, 2002
reflects continued market price pressures on the Companys product lines, costs
associated with integrating facilities and lower unit volumes that resulted
in underabsorbed overhead costs. The Company expects gross margins to fluctuate
in future periods due to changes in the product mix, the costs of components
and the competition in the industry.

Gross margin on
services revenues was 10% for the three months ended
September 30, 2002 as compared to 7% for the same period in the prior fiscal
year. The increase in gross margin for the three months ended September 30,
2002 compared to the prior year was primarily due to a decrease in
indirect overhead expenses.

Research, Development and Engineering

Research, development and engineering expenses were $3,088,000 or 22% of
product revenues for the three months ended September 30, 2002 compared to
$2,613,000 or 43% of product revenues for the same period in the prior fiscal
year. The increase in research, development and engineering expenses for the
three months ended September 30, 2002 is primarily due to the increase use of
outside contractors and related expenses to further develop and enhance the
Companys products. The Company believes investment in research and
development is critical in maintaining a strong technological position in the
industry.

Marketing and Selling

Marketing and selling expenses were $3,251,000 or 13% of total revenues
for the three months ended September 30, 2002 compared to $3,451,000 or 21% of
total revenues for the same period in the prior fiscal year. The decrease in
marketing and selling expenses was primarily due to reduced staffing,
from 81 employees to 78 employees, as part of
the Companys restructuring efforts and continued control of marketing
expenditures.

General and Administrative

General and administrative expenses were $4,883,000 or 19% of total
revenues for the three months ended September 30, 2002 compared to $3,528,000
or 21% of total revenues for the same period in the prior fiscal year. The
increase in general and administrative expenses was due to increased stock
option amortization expenses associated with the Visionics merger, increased
recruitment fees and subcontractor costs and increased headcount, from
10 employees to 14 employees, in the
Companys Information Technology department.

14



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Restructuring Write-offs and Other Merger Related Charges

Fiscal 2003

During the three months ended September 30, 2002, the Company recorded
merger related expenses totaling $3,171,000 that consisted of $1,826,000 in
relocation costs and $1,345,000 related to employees with extended terminations
to assist in the integration. Such costs are expensed as incurred.

During the three months ended September 30, 2002, the Company recorded a
loss of $3,766,000 on the sublease of a portion of its Fairfax, Virginia
facility. The loss represented the difference between the remaining lease
obligation of $5,222,000, abandoned property and equipment of $445,000 and
costs to sublet the facility of $375,000, and the sublease income of
$2,276,000. During the three months ended September 30, 2002, the Company
recorded income of $182,000 through the reversal of a reserve relating to the
shut down of the Companys Virginia Beach-based Law Enforcement Solutions
Division (LESD) group as the actual costs to dispose of the division were
less than estimated.

Fiscal 2002

In June 2001, the Company initiated a restructuring of its worldwide
operations to reduce costs and increase operational efficiencies. In
connection with the restructuring, in July 2001, the Company initiated a
workforce reduction of approximately 42 employees, or 10% of its workforce to
streamline its worldwide functions, operations and resources primarily in
marketing, selling and administration. The workforce reduction resulted in a
$1,712,000 charge during the quarter ended September 30, 2001 relating
primarily to severance and fringe benefits. Related cash payments of $992,000
were made during the three months ended September 30, 2001. The remaining
liability at September 30, 2001 of $720,000 was included in accrued
compensation in the condensed consolidated balance sheets.

The following table
represents a summary of restructuring, write-offs and other merger
related charges:

|                                |       |   |                 |            |  |           |           |           |                  |   |         |               |  |   |                    |          
|------------------------------- | ----- | - | --------------- | ---------- |  | --------- | --------- | --------- | ---------------- | - | ------- | ------------- |  | - | ------------------ | ---------
|                                |       |   | Restructuring   |            |  |           |           |           |                  |   |         |               |  |   |                    |          
|                                |       |   | Liability as
of |            |  |           |           |           |                  |   |         |               |  |   |                    |          
|                                |       |   | June 30, 2002   |            |  | Additions |           |           | Non-Cash Charges |   |         | Cash Payments |  |   | September 30, 2002
|                                |       |   |                 |            |  |           |           |           |                  |   |         |               |  |   |                   
|Severance and benefits          |       | $ | 2,493,000       |            |  | $         | 1,345,000 |           |                  | $ |        |               |  | $ | 2,251,000          |          
|Lease exit costs                |       |   | 10,340,000      |            |  |           | 3,766,000 |           |                  |   | 247,000 |               |  |   | 371,000            |          
|Internal merger costs and other |       |   | 814,000         |            |  |           | 1,644,000 |           |                  |   |        |               |  |   | 2,359,000          |          
|                                |       |   |                 |            |  |           |           |           |                  |   |         |               |  |  
|                                | Total |   | $               | 13,647,000 |  |           | $         | 6,755,000 |                  |   | $       | 247,000       |  |   | $                  | 4,981,000
|                                |       |   |                 |            |  |           |           |           |                  |   |         |               |  |  



Interest and Other Income (Expense), net

For the three months ended September 30, 2002, interest and other income
(expense), net was $374,000 compared to $222,000 for the same period in the
prior fiscal year. The increase in interest and other income (expense), net was
primarily due to proceeds of $96,000 received for the Companys assignment of a certain
trademark and the release of any rights to a certain patent. Interest and
other income for the three months ending September 30, 2002 and 2001 was
primarily composed of interest income of $167,000 and $178,000, respectively,
license fees from Sylvan Identix Fingerprinting Centers
(SIFC) of $99,000 and $86,000, respectively and miscellaneous
income of $96,000 and nil, respectively.

Interest Expense

Interest expense was $1,000 for the three months ended September 30, 2002
compared to nil for the same period in the prior fiscal year. There have been
no borrowings under the Companys lines of credit for the three months ended
September 30, 2002 and 2001. Interest expense is comprised primarily of
interest costs associated with the Companys leased vehicles in the United
Kingdom.

Benefit (Provision) for Income Taxes

The Company recorded income tax provisions of $22,000 for the three months
ended September 30, 2002. The provision

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consisted of certain state franchise
taxes. During the same period in the prior fiscal year the Company experienced
a tax benefit of $1,000.

Equity Interest in Income of Joint Venture

The equity interest in income of joint venture represents the Companys
50% share of the results of SIFC. For the three months ended September 30,
2002 and 2001, the Companys equity interest in joint venture income was
$58,000 and $92,000, respectively. The decrease in the equity interest was due
to decreased net income of SIFC.

Liquidity and Capital Resources

The Company financed its operations during the three months ended
September 30, 2002 primarily from its working capital at June 30, 2002. As of September
30, 2002, the Companys principal sources of liquidity consisted
of $57,437,000
of working capital including $49,541,000 in cash and cash equivalents and
short-term marketable securities. The Company also has $11,792,000 available for
future borrowings under the Companys bank lines of credit.

At September 30,
2002, the Company has two lines of credit. The Companys
first line of credit (the Identix Line of Credit) was entered into in
September 2001 and was amended on March 28, 2002. This line of credit provides
for up to the lesser of $15,000,000 or 80% of the Companys eligible product
accounts receivable and 85% of IPS eligible accounts receivable. Borrowings
under the Identix Line of Credit are collateralized by substantially all of the assets
of the Company and bear interest at the banks prime rate of interest plus 50
basis points (5.25% at September 30, 2002). The Identix Line of Credit expires
on March 28, 2003. At September 30, 2002, there were no amounts outstanding
under this line of credit and approximately $9,792,000 was available to
borrow.

The Companys second line of credit (the Visionics Line of Credit),
which was established by Visionics Corporation (Visionics), a wholly owned
subsidiary of the Company, is an inventory and receivables based line of credit
for the lesser of eligible inventory and accounts receivables or $2,000,000.
Borrowings under the Visionics Line of Credit are collateralized by Visionics
inventory and accounts receivable. The Visionics Line of Credit bears interest
at the banks prime rate of interest plus 50 basis points (5.25% at September
30, 2002). The line of credit will expire on March 30, 2003. At September 30,
2002 there were no amounts outstanding under this line of credit and $2,000,000
was available to borrow.

The Identix Line of Credit and the Visionics Line of Credit agreements
contain financial and operating covenants, including restrictions on the
Companys ability to pay dividends on its common stock. At September 30, 2002,
the Company was in compliance with such covenants.

The Company used cash
in operating activities of $12,104,000 during the
three months ended September 30, 2002 as compared to $7,268,000 for the same
period in the prior fiscal year. The primary use of cash for the three months
ended September 30, 2002 was due to (i) the net loss of $14,199,000 which
includes a one-time charge for merger and acquisition related charges of
$6,755,000, depreciation and amortization of $2,090,000, and (ii) an increase
in accounts receivable of $3,817,000, decreases in accounts payable of
$1,086,000 and deferred compensation of $500,000 partially offset by an
increase in other accrued liabilities of $2,968,000 and a decrease in
inventories of $1,092,000. The primary use of cash during the three months
ended September 30, 2001 was due to (i) the net loss of $8,476,000 which
includes a one-time charge for restructuring expense of $1,712,000,
depreciation and amortization of $862,000 and (ii) a decrease in accounts
receivable of $4,049,000, partially offset by a decrease in accounts payable of
$2,707,000 and an increase in inventories of $1,052,000.

The Company used
cash for investing activities during the three months ended September 30, 2002 and
2001, of $454,000 and $1,546,000, respectively, consisting primarily for the
purchase of property and equipment.

The Company generated
cash from financing activities of $544,000 from the
exercise of stock options during the three months ended September 30, 2002 as
compared to cash generated from financing activities of $115,000 for the same
period in the prior fiscal year.

The Company did not have any material capital expenditure commitments as
of September 30, 2002.

The Company currently occupies its Minnesota headquarters under a lease
that expires in March 2008, and is required to pay taxes, insurance, and
maintenance as well as monthly rental payments. In addition, the Company
leases space for its
former headquarters in Los Gatos, California under a lease that expires in
December of 2007; and a space in Dublin, California for its former research,
development and engineering activities that expire in March 2006. Further, the
Company leases office space for its sales force and customer support activities
under operating leases, which expire at various dates through 2008.

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The
Company leases office space for its IPS business under operating leases
expiring at various dates through 2011. The leases contain escalation
provisions requiring rental increases for increases in operating expense and
real estate taxes.

Future minimum lease payments for operating leases are as follows:

|                            |  |   |            | 
|--------------------------- |  | - | ---------- | 
|Fiscal year ending June 30: |  |   |            | 
|2003                        |  | $ | 5,261,000  | 
|2004                        |  |   | 7,302,000  | 
|2005                        |  |   | 7,541,000  | 
|2006                        |  |   | 6,869,000  | 
|2007                        |  |   | 6,412,000  | 
|Thereafter                  |  |   | 10,557,000 | 
|                            |  |   |           
|Total                       |  | $ | 43,942,000 | 
|                            |  |   |           

Included in the above future minimum payments is $12,329,000 related to
two leased facilities that were vacated in connection the Companys merger with
Visionics. At June 30, 2002 the Company recorded a charge of $10,340,000
representing a portion of the future lease costs related to these excess leased
facilities.

While the Company believes that future cash flows from operations,
together with existing working capital and available lines of credit, may be
adequate to fund the Companys current cash requirements, the Company may need
to raise additional debt or equity financing in the future. The Company may not
be able to obtain additional debt or equity financing. If successful in raising
additional financing, the Company may not be able to do so on terms that are
not excessively dilutive to existing stockholders or less costly than existing
sources of financing. Failure to secure additional financing in a timely manner
and on favorable terms in the future could have a material adverse impact on
the Companys financial performance and stock price and require the Company to
implement certain cost reduction initiatives and curtail certain of its
operations.

Recent Accounting Pronouncements

Effective July 1, 2002, the Company adopted SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. This statement addresses
financial accounting and reporting for the impairment of long-lived assets and
for long-lived assets to be disposed of and supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of and APB Opinion No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions. The
adoption did not have a material impact on its financial position and results
of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Exit or
Disposal Activities. SFAS 146 addresses significant issues regarding the
recognition, measurement, and reporting of costs that are associated with exit
and disposal activities, including restructuring activities that are currently
accounted for under EITF No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). The scope of SFAS 146 also includes costs
related to terminating a contract that is not a capital lease and termination
benefits that employees who are involuntarily terminated receive under the
terms of a one-time benefit arrangement that is not an ongoing benefit
arrangement or an individual deferred-compensation contract. SFAS 146 will be
effective for exit or disposal activities that are initiated after December 31,
2002 but early application is encouraged. The provisions of EITF No. 94-3 shall
continue to apply for an exit activity initiated under an exit plan that met
the criteria of EITF No. 94-3 prior to the adoption of SFAS 146. Adopting the
provisions of SFAS 146 will change, on a prospective basis, the timing of when
restructuring charges are recorded from a commitment date approach to when the
liability is incurred.

RISK FACTORS

This report on Form 10-Q contains forward-looking statements that involve
risks and uncertainties. The Companys business, operating results, financial
performance, and share price may be materially adversely affected by a number
of factors, including but not limited to the following risk factors, any one of
which could cause actual results to vary materially from anticipated results or
from those expressed in any forward-looking statements made by the Company in
this quarterly report on Form 10-Q or in other reports, press releases or other
statements issued from time to time. Additional factors that may cause such a
difference are set forth in the Companys annual report on Form 10-K.

Our business will not grow unless the market for biometric solutions expands
both domestically and internationally.

Our product revenues and a portion of our service revenues are derived
from the sale of biometric products and services. Biometric solutions have not
gained widespread commercial acceptance. We cannot accurately predict the
future growth rate, if any, or the ultimate size

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of the biometric technology
market. The expansion of the market for our products and services depends on a
number of factors including without limitation:



| |  |  | the cost, performance and reliability of our products and services and the products and services of competitors;                         
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | customers perception of the perceived benefit of biometric solutions;                                                                   
|
| |  |  | public perceptions of the intrusiveness of these solutions and
the manner in which firms are using the fingerprint information
collected;
|
| |  |  | public perceptions regarding the confidentiality of private information;                                                                 
|
| |  |  | customers satisfaction with our products and services; and                                                                              
|
| |  |  | marketing efforts and publicity regarding these products and services.                                                                   

Certain groups have publicly objected to the use of biometric products for
some applications on civil liberties grounds and legislation has been proposed
to regulate the use of biometric security products. From time to time,
biometrics technologies have been the focus of organizations and individuals
seeking to curtail or eliminate such technologies on the grounds that they may
be used to diminish personal privacy rights. In the event that such initiatives
result in restrictive legislation, the market for biometric solutions may be
adversely affected. Even if biometric solutions gain wide market acceptance,
our products and services may not adequately address the requirements of the
market and may not gain wide market acceptance.

We face intense competition from other biometric solution providers as well as
identification and security systems providers.

A significant number of established and startup companies have developed
or are developing and marketing software and hardware for fingerprint biometric
security applications that currently compete or will compete directly with
those products designed, developed and sold under our line of Security
products. Some of these companies have developed or are developing and
marketing semiconductor or optically based direct contact fingerprint image
capture devices. Other companies have developed or are developing and marketing
other methods of biometric identification such as retinal blood vessel or iris
pattern, hand geometry, voice and facial structure. If one or more of these
technologies or approaches were widely adopted, it would significantly reduce
the potential market for our products. Our Security products also compete with
non-biometric technologies such as certificate authorities, and traditional
key, card, surveillance systems and passwords. Many competitors offering
products that are competitive with our Security products and services have
significantly more financial and other resources than we have. The biometric
security market is a rapidly evolving and intensely competitive market, and we
believe that additional competitors may yet enter the market and become
significant long-term competitors.

The products designed, developed and sold under our line of products known
as our Imaging products also face intense competition from a number of
competitors who are actively engaged in developing and marketing live scan
products, including Heimann Biometric Systems GmbH, Sagem Morpho, Inc.,
Printrak International, Inc., (a company owned by Motorola), and CrossMatch
Technologies, Inc.

We expect competition to increase and intensify in the near term in the
biometrics markets. Companies competing with us may introduce products that are
competitively priced, that have increased performance or functionality or that
incorporate technological advances not yet developed or implemented by us. Some
present and potential competitors have financial, marketing, research, and
manufacturing resources substantially greater than ours.

In order to compete effectively in this environment, we must continually
develop and market new and enhanced products at competitive prices and must
have the resources available to invest in significant research and development
activities. The failure to do so could have a material adverse effect on our
business operations, financial results and stock price.

Integration of our business and Visionics business following our merger may be
difficult to achieve, which may adversely affect operations.

Our merger with Visionics, which was completed in June 2002, continues to
present risks related to the integration and management of technology,
operations and personnel of two companies. The integration of the businesses of
the two companies is a complex, time-consuming and expensive process and may
disrupt our business if not completed in a timely and efficient manner. We
operate with Visionics as a combined organization utilizing common information
and communications systems, operating procedures, financial controls and human
resources practices.

We may encounter substantial difficulties, costs and delays involved in
integrating the companies operations, including:



| |  |  | potential conflicts between business cultures;
| | - |  | ----------------------------------------------

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| |  |  | adverse changes in business focus perceived by third-party constituencies;                                
| | - |  | ----------------------------------------------------------------------------------------------------------
|
| |  |  | potential conflicts in distribution, marketing or other important relationships;                          
|
| |  |  | inability to implement uniform standards, controls, procedures and policies;                              
|
| |  |  | integration of the research and development and product development efforts; and                          
|
| |  |  | loss of key employees and/or the diversion of managements attention from other ongoing business concerns.

In addition, prior to the merger, Visionics was co-headquartered in New
Jersey and Minnesota, with offices in five locations, and Identix was
headquartered in Northern California, with offices in nine locations. After
the merger, we moved our headquarters to Minnesota. The geographic distances
and the consolidation of operations increase the risk that the integration will
not be completed successfully or in a timely and cost-effective manner. We may
not be successful in overcoming these risks or any other problems encountered
in connection with the integration of the companies.

The substantial costs of the merger and the manner of accounting for the merger
may affect Identix reported results of operations.

Approximately $25 million of costs are expected to be incurred by
Visionics and us in connection with the merger. Such amount includes costs
associated with combining the businesses of the two companies, including
integration and restructuring costs, costs associated with the consolidation of
operations and the fees of financial advisors, attorneys and accountants. A
significant portion of these costs will be charged to expense in the period
incurred, reducing our earnings or increasing our loss for such period. The
remaining costs, consisting primarily of fees and expenses paid to financial
advisors, attorneys and accountants, will be a component of the purchase price
and capitalized as an element of goodwill. Goodwill is required to be tested
for impairment at least annually and we will be required to record a charge to
earnings in the period any impairment of goodwill is determined. There is a
risk that the management of the combined company will not be able to
effectively control the costs associated with the integration of the two
companies or that such costs may be higher than anticipated. The failure to
manage such integration costs effectively could have a material adverse effect
on the business operations, financial results and stock price of the combined
company.

The market price of our common stock could decline.

The market price of our common stock could decline if:



| |  |  | our integration with Visionics is unsuccessful;                                                                                                                                                                                                       
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the combined company is unable to successfully market our
products and services to Visionics customers or Visionics products
and services to our customers;                                                                                         
|
| |  |  | the combined company does not achieve the perceived benefits of
the merger as rapidly as, or to the extent, anticipated by financial
or industry analysts, or such analysts do not perceive the same
benefits to the merger as do we and Visionics; or
|
| |  |  | the effect of the merger on our financial results is not
consistent with the expectations of financial or industry analysts.                                                                                                                          

The terrorist attacks of September 11, 2001 have increased financial
expectations that may not materialize.

The September 11, 2001 terrorist attacks may have created an increase in
awareness for biometric security solutions generally. However, it is uncertain
whether the actual level of demand for our biometric products and services will
grow as a result of such increased awareness. Increased demand may not result
in an actual increase in our product or services revenues. In addition, it is
uncertain which security solutions, if any, will be adopted as a result of the
terrorism and whether our products will be a part of those solutions. Should
our products be considered or adopted as solutions to the terrorism, the level
and timeliness of available funding are unclear. These factors may adversely
impact us and create unpredictability in revenues and operating results.

We may need to raise additional equity or debt financing in the future.

While we believe that future cash flows from operations, together with
existing working capital and available lines of credit, may be adequate to fund
our current cash requirements, we may need to raise additional debt or equity
financing in the future. We may not be able to obtain additional debt or equity
financing. If successful in raising additional financing, we may not be able to
do so on terms that are not excessively dilutive to existing stockholders or
less costly than existing sources of financing. Failure to secure additional
financing in a timely manner and on favorable terms in the future could have a
material adverse impact on our financial performance and stock price and
require us to implement certain cost reduction initiatives and curtail certain
of our operations.

Future growth depends in part on the success of itrust, a relatively new
business activity with little operating history.

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Our future growth may depend on the success of itrust, which was formed in
July 2000 and has a limited operating history. itrusts success will depend on
many factors, including, but not limited to:



| |  |  | our ability to form additional collaborative partnerships that will contribute technical and commercial value to itrust;                                               
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the demand for our security products and itrust products and services;                                                                                                 
|
| |  |  | our ability to successfully and rapidly manufacture, disseminate and deploy biometric enabled products and services;                                                   
|
| |  |  | the ability and willingness of our collaborative partners to
successfully and rapidly promote, manufacture, disseminate and deploy
biometric enabled products services;
|
| |  |  | the levels of competition in the space for Internet and wireless web security services;                                                                                
|
| |  |  | the perceived need for secure communications and commerce in such markets;                                                                                             
|
| |  |  | our ability to successfully introduce new products and services; and                                                                                                   
|
| |  |  | our ability to expand its operations and attract, integrate,
retain and motivate qualified sales, marketing, and research and
development personnel.                   

A significant number of established and startup companies have developed
or are developing and marketing security and/or authentication solutions that
currently compete or will compete directly with itrusts solutions. Some of
these companies have significantly more cash and resources than we do, and may
currently offer a broader or more robust range of solutions than those
currently available through the itrust offering. The wired and wireless
security and authentication marketplace is rapidly evolving and intensely
competitive and we believe that additional competitors may yet enter the
market and become significant long-term competitors.

We have experienced net losses in the last two fiscal years and expect
additional losses in the future. itrust is not expected to contribute
significant revenues or positive cash flows in the foreseeable future. At the
same time, however, we will incur significant costs in the design, development,
manufacture, sale and deployment of itrust products and services and in the
execution of itrusts business plan. In part because of the significant
investment we will make in itrust, we expect to incur substantial additional
losses and negative cash flows from it in the foreseeable future.

We face substantial competition from professional service providers of all
sizes in the government marketplace.

Our wholly-owned subsidiary, IPS, is increasingly being required to bid on
firm fixed price and similar contracts that result in greater performance risk
to IPS. If IPS is not able to maintain a competitive cost structure, support
specialized market niches, retain highly qualified personnel or align with
technology leaders, we may lose our ability to compete successfully in the
services business.

The biometrics industry is characterized by rapid technological change and
evolving industry standards, which could render existing products obsolete.

Our future success will depend upon our ability to develop and introduce a
variety of new products and services and enhancements to these new product and
services in order to address the changing and sophisticated needs of the
marketplace. Frequently, technical development programs in the biometric
industry require assessments to be made of the future directions of technology
and technology markets generally, which are inherently risky and difficult to
predict. Delays in introducing new products, services and enhancements, the
failure to choose correctly among technical alternatives or the failure to
offer innovative products and services at competitive prices may cause
customers to forego purchases of our products and services and purchase those
of our competitors.

Continued participation by us in the market for live scan systems that are
linked to forensic quality databases under the jurisdiction of governmental
agencies may require the investment of our resources in upgrading our products
and technology for us to compete and to meet regulatory and statutory
standards. We may not have adequate resources available to us or may not
adequately keep pace with appropriate requirements in order to effectively
compete in the marketplace.

Our financial and operating results often vary significantly from quarter to
quarter and may be negatively affected by a number of factors.

Our financial and operating results may fluctuate from quarter to quarter because of the following reasons:



| |  |  | reduced demand for products and services caused by competitors;                                                          
| | - |  | -------------------------------------------------------------------------------------------------------------------------
|
| |  |  | price reductions, new competitors, or the introduction of enhanced products or services from new or existing competitors;

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| |  |  | changes in the mix of products and services we or our distributors sell;                                                    
| | - |  | ----------------------------------------------------------------------------------------------------------------------------
|
| |  |  | cancellations, delays or contract amendments by government agency customers;                                                
|
| |  |  | the lack of availability of government funds;                                                                               
|
| |  |  | unforeseen legal expenses, including litigation costs;                                                                      
|
| |  |  | expenses related to
acquisitions or mergers;                                                                                
|
| |  |  | other one-time financial charges;                                                                                           
|
| |  |  | the lack of availability or increase in cost of key components and subassemblies; and                                       
|
| |  |  | the inability to successfully manufacture in volume certain of
our products that may contain complex designs and components.

Particularly important is the need to invest in planned technical
development programs to maintain and enhance our competitiveness, and to
develop and launch new products and services. Improving the manageability and
likelihood of success of such programs requires the development of budgets,
plans and schedules for the execution of these programs and the adherence to
such budgets, plans and schedules. The majority of such program costs are
payroll and related staff expenses, and secondarily materials, subcontractors
and promotional expenses. These costs are very difficult to adjust in response
to short-term fluctuations in our revenues, compounding the difficulty of
achieving profitability in the event of a revenue downturn.

Our lengthy and variable sales cycle will make it difficult to predict
operating results.

Certain of our products often have a lengthy sales cycle while the
customer evaluates and receives approvals for purchase. If, after expending
significant funds and effort, we fail to receive an order, a negative impact on
our financial results and stock price could result.

It is difficult to predict accurately the sales cycle of any large order
for any of our products. If we do not ship one or more large orders as forecast
for a fiscal quarter, our total revenues and operating results for that quarter
could be materially and adversely affected.

The substantial lead-time required for ordering parts and materials may lead to
excess or insufficient inventory.

The lead-time for ordering parts and materials and building many of our
products can be many months. As a result, we must order parts and materials and
build our products based on forecasted demand. If demand for our products lags
significantly behind our forecasts, we may produce more products than we can
sell, which can result in cash flow problems and write-offs or write-downs of
obsolete inventory.

We derive a majority of our services revenue from government contracts, which
are often non-standard, involve competitive bidding, may be subject to
cancellation without penalty and may produce volatility in earnings and
revenue.

Our performance in any one reporting period is not necessarily indicative
of sale trends or future operating or earnings performance because of our
reliance on a small number of large customers, the majority of which are
government agencies. Government contracts frequently include provisions that
are not standard in private commercial transactions. For example, government
contracts may include bonding requirements and provisions permitting the
purchasing agency to cancel the contract without penalty in certain
circumstances. As public agencies, our prospective customers are also subject
to public agency contract requirements that vary from jurisdiction to
jurisdiction. Some of these requirements may be onerous or impossible to
satisfy.

In addition, public agency contracts are frequently awarded only after
formal competitive bidding processes, which have been and may continue to be
protracted, and typically impose provisions that permit cancellation in the
event that funds are unavailable to the public agency. There is a risk that we
may not be awarded any of the competitive bidding processes, which have been
and may continue to be protracted, and typically impose provisions that permit
cancellation in the event that funds are unavailable to the public agency.
Furthermore, unsuccessful bidders for public agency contracts are provided the
opportunity to formally protest certain contract awards through various agency,
administrative and judicial channels. The protest process may delay a
successful bidders contract performance for a number of weeks, months or more,
or cancel the contract award entirely. Although we have not previously
experienced a substantial number of contract delays or cancellations due to
protest initiated by losing bidders, there is a risk that we may not be awarded
contracts for which we bid or, if awarded, that substantial delays or
cancellation of purchases may follow as a result of such protests. In addition,
local government agency contracts may be contingent upon availability of
matching funds from federal or state entities. Also, law enforcement and other
government agencies are subject to political, budgetary, purchasing and
delivery constraints which may continue to result in quarterly and annual
revenues and operating results that may be irregular and difficult to predict.
Such revenue volatility makes management of inventory levels,
cash flow and profitability inherently difficult. In addition, in the
event we are successful in winning such procurements, there may be unevenness
in shipping schedules, as well as potential delays and schedule changes in the
timing of deliveries and recognition of revenue, or cancellation of such
procurements.

21



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##### Table of Contents



For the three months ended September 30, 2002, we derived approximately
85% of our services revenue directly from contracts relating to the Department
of Defense and other U.S. Government agencies. The loss of a material
government contract due to budget cuts or otherwise could have a severe
negative impact on our financial results and stock price.

For the three months ended September 30, 2002, we derived approximately
93% of our services revenue from time-and-materials (T&M) contracts and
firm-fixed-price (FFP) contracts. We assume certain performance risk on
these contracts. If we fail to estimate accurately ultimate costs or to control
costs during performance of the work, our profit margins may be reduced and we
may suffer losses. In addition, revenues generated from government contracts
are subject to audit and subsequent adjustment by negotiation with
representatives of the government agencies. The Defense Contract Audit Agency
is currently auditing IPS for the periods from July 1, 1997 to June 30, 2000.
While we believe that the results of such audit will have no material effect on
our profits, if made, such adjustments may have a material adverse effect on
our business, financial condition and results of operations.

Our results of operations may be harmed by governmental credit, funding
and other policies.

We extend substantial credit to federal, state and local governments in
connection with sales of our products and services. Sales to sizeable customers
requiring large and sophisticated networks of fingerprint recognition and live
scan systems and peripheral equipment often include technical requirements
which may not be fully known at the time requirements are specified by the
customer. In addition, contracts may specify performance criteria that must be
satisfied before the customer accepts the products and services. Collection of
accounts receivable may be dependent on completion of customer requirements,
which may be unpredictable, subject to change by the customer, and not fully
understood at the time of acceptance of the order, and may involve investment
of additional resources. These investments of additional resources are accrued
when amounts can be estimated but may be uncompensated and negatively affect
profit margins and our liquidity.

Furthermore, in many instances, customer procurements are dependent on the
availability or continued availability of federal, state or local government
funds or grants and general tax funding. Such funding may not be approved or,
if approved, it may not be available for the purchase of our products or
solutions, and even if such funding is approved and available, such funds may
be subject to termination at any time at the sole discretion of the government
body providing or receiving such funds.

Additionally, without regard to termination of funding, government
agencies both domestically and internationally may successfully assert the
right to terminate business or funding relationships with us at their sole
discretion without adequate or any compensation or recourse for us.

We rely in part upon original equipment manufacturers (OEM) and distribution
partners to distribute our products, and we may be adversely affected if those
parties do not actively promote our products or pursue installations that use
our equipment.

A significant portion of our product revenues comes from sales to partners
including OEM, systems integrators, distributors and resellers. Some, but not
all, of these relationships are formalized in written agreements. Even where
these relationships are formalized in written agreements, the agreements are
often terminable with little or no notice and subject to periodic amendment. We
cannot control the amount and timing of resources that our partners devote to
activities on our behalf.

We intend to continue to seek strategic relationships to distribute,
license and sell certain of our products. We, however, may not be able to
negotiate acceptable relationships in the future and cannot predict whether
current or future relationships will be successful.

We rely heavily on products and services provided by International Technology
Concepts, Inc. (IT Concepts).

Many of our product lines require the purchase of certain complete
biometric security and imaging products, components of products and research,
development and engineering services related to the development of products
from IT Concepts. IT Concepts is also contributing to the development of
certain of itrusts solutions. In turn, IT Concepts subcontracts portions of
its development work to an affiliate in Russia and brings in a portion of its
engineering and personnel resources from Russia under applicable immigration
laws. In recent years competition for a limited number of available visas for
foreign high-technology workers and/or consultants has intensified as more U.S.
companies have chosen to look abroad for supplemental research, development and
engineering resources.

If we were to lose IT Concepts as a supplier of products and engineering
services, or if IT Concepts were prohibited or restricted from bringing in a
portion of its engineering requirements or resources, because of lack of
availability of applicable immigration visas or otherwise, we would be required
to find alternative suppliers of products and services or hire additional
engineering personnel to provide the services. This could require us to incur
significant additional research and development costs and delay shipment of
products to customers and the development of new technology and products. There
is a risk that we would not be able to find such personnel or suppliers at a
reasonable cost, or at all. Any delay in product development or shipment could
have a material adverse effect on our business, operations, financial results
and stock price. Identix is a party to a series of agreements with IT Concepts
governing IT Concepts supply of research, development and engineering services
to Identix. Identix relies in part on these agreements to protect its
ownership, and the confidentiality of
Identix proprietary technology, trade secrets and other intellectual
property rights developed under the agreements. There is a risk that these
agreements may be inadequate to protect Identix, or that such agreements may be
breached, and that the remedies available to Identix may not be adequate.

22



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##### Table of Contents



Loss of sole or limited source suppliers may result in delays or additional
expenses.

We obtain certain components and complete products from a single source or
a limited group of suppliers. We do not have long-term agreements with any of
our suppliers. We will experience significant delays in manufacturing and
shipping of products to customers if we lose these sources or if supplies from
these sources are delayed.

As a result, we may be required to incur additional development,
manufacturing and other costs to establish alternative sources of supply. It
may take several months to locate alternative suppliers, if required, or to
re-tool our products to accommodate components from different suppliers. We
cannot predict if we will be able to obtain replacement components within the
time frames we require at an affordable cost, or at all. Any delays resulting
from suppliers failing to deliver components or products on a timely basis in
sufficient quantities and of sufficient quality or any significant increase in
the price of components from existing or alternative suppliers could have a
severe negative impact on our financial results and stock price.

The success of our strategic plan to pursue sales in international markets may
be limited by risks related to conditions in such markets.

For the year ended June 2002, and the three months ended September 30,
2002, we derived approximately 13% and 5%, respectively, of our product
revenues from international sales. We currently have a local presence in the
United Kingdom and the Commonwealth of Australia.

There is a risk that we may not be able to successfully market, sell and
deliver our products in foreign countries, or successfully rely on supplemental
offshore research and development resources.

Risks inherent in marketing, selling and delivering products in foreign
and international markets, each of which could have a severe negative impact on
our financial results and stock price, include those associated with:



| |  |  | regional economic conditions;                                                                                                                                                                   
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | delays in or absolute prohibitions on exporting products
resulting from export restrictions for certain products and
technologies, including crime control products and encryption
technology;
|
| |  |  | loss of, or delays in importing products, services and
intellectual property developed abroad, resulting from unstable or
fluctuating social, political or governmental conditions;             
|
| |  |  | fluctuations in foreign currencies and the U.S. dollar;                                                                                                                                         
|
| |  |  | loss of revenue, property (including intellectual property) and
equipment from expropriation, nationalization, war, insurrection,
terrorism, criminal acts and other political and social risks;
|
| |  |  | the overlap of different tax structures;                                                                                                                                                        
|
| |  |  | seasonal reductions in business activity;                                                                                                                                                       
|
| |  |  | risks of increases in taxes and other government fees; and                                                                                                                                      
|
| |  |  | involuntary renegotiations of contracts with foreign governments.                                                                                                                               

In addition, foreign laws treat the protection of proprietary rights
differently from laws in the United States and may not protect our proprietary
rights to the same extent as U.S. laws. The failure of foreign laws or judicial
systems to adequately protect our proprietary rights or intellectual property,
including intellectual property developed on our behalf by foreign contractors
or subcontractors may have a material adverse effect on our business,
operations, financial results and stock price.

One stockholder owns a significant portion of our stock and may delay or
prevent a change in control or adversely affect the stock price through sales
in the open market.

As of September 30, 2002, the State of Wisconsin Investment Board owned
approximately 9% of the Companys outstanding common stock. The concentration
of large percentages of ownership in any single stockholder may delay or
prevent change in control of the Company.
Additionally, the sale of a significant number of our shares in the open
market by a single stockholder or otherwise could adversely affect our stock
price.

We may be subject to loss in market share and market acceptance as a result of
manufacturing errors, delays or shortages.

23



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##### Table of Contents



Performance failure in our products or certain of our services may cause
loss of market share, delay in or loss of market acceptance, additional
warranty expense or product recall, or other contractual liabilities. The
complexity of certain of our fingerprint readers makes the manufacturing and
assembly process of such products, especially in volume, complex. This may in
turn lead to delays or shortages in the availability of certain products, or,
in some cases, the unavailability of certain products. The negative effects of
any delay or failure could be exacerbated if the delay or failure occurs in
products or services (such as itrust services) that provide personal security,
secure sensitive computer data, authorize significant financial transactions or
perform other functions where a security breach could have significant
consequences.

If a product or service launch is delayed or is the subject of an
availability shortage because of problems with our ability to manufacture or
assemble the product or service successfully on a timely basis, or if a product
or service otherwise fails to meet performance criteria, we may lose revenue
opportunities entirely and/or experience delays in revenue recognition
associated with a product or service in addition to incurring higher operating
expenses during the period required to correct the defects. There is a risk
that for unforeseen reasons we may be required to repair or replace a
substantial number of products in use or to reimburse customers for products
that fail to work or meet strict performance criteria. We carry product
liability insurance, but existing coverage may not be adequate to cover
potential claims.

We may be subject to repair, replacement, reimbursement and liability claims as
a result of products that fail to work or to meet applicable performance
criteria.

There is a risk that for unforeseen reasons we may be required to repair
or replace a substantial number of products in use or to reimburse customers
for products that fail to work or meet strict performance criteria. We attempt
to limit remedies for product or service failure to the repair or replacement
of malfunctioning or noncompliant products or services, and also attempt to
exclude or minimize exposure to product and related liabilities by including in
our standard agreements warranty disclaimers and disclaimers for consequential
and related damages as well as limitations on our aggregate liability. From
time to time, in certain complex sale or licensing transactions, we may
negotiate liability provisions that vary from such standard forms. There is a
risk that our contractual provisions may not adequately minimize our product
and related liabilities or that such provisions may be unenforceable. We carry
product liability insurance, but existing coverage may not be adequate to cover
potential claims. The Company maintains warranty reserves as deemed adequate
by management.

Failure by us to maintain the proprietary nature of our technology,
intellectual property and manufacturing processes could have a material adverse
effect on our business, operating results, financial condition and stock price
and on our ability to compete effectively.

We principally rely upon patent, trademark, copyright, trade secret and
contract law to establish and protect our proprietary rights. There is a risk
that claims allowed on any patents or trademarks we hold may not be broad
enough to protect our technology. In addition, our patents or trademarks may be
challenged, invalidated or circumvented and we cannot be certain that the
rights granted thereunder will provide competitive advantages to us. Moreover,
any current or future issued or licensed patents, or trademarks, or currently
existing or future developed trade secrets or know-how may not afford
sufficient protection against competitors with similar technologies or
processes, and the possibility exists that certain of our already issued
patents or trademarks may infringe upon third party patents or trademarks or be
designed around by others. In addition, there is a risk that others may
independently develop proprietary technologies and processes, which are the
same as, substantially equivalent or superior to ours, or become available in
the market at a lower price.

There is a risk that we have infringed or in the future will infringe
patents or trademarks owned by others, that we will need to acquire licenses
under patents or trademarks belonging to others for technology potentially
useful or necessary to us, and that licenses will not be available to us on
acceptable terms, if at all.

We may have to litigate to enforce our patents or trademarks or to
determine the scope and validity of other parties proprietary rights.
Litigation could be very costly and divert managements attention. An adverse
outcome in any litigation may have a severe negative impact on our financial
results and stock price. To determine the priority of inventions, we may have
to participate in interference proceedings declared by the United States Patent
and Trademark Office or oppositions in foreign patent and trademark offices,
which could result in substantial cost to the Company and limitations on the
scope or validity of our patents or trademarks.

We also rely on trade secrets and proprietary know-how, which we seek to
protect by confidentiality agreements with our employees, consultants, service
providers and third parties. There is a risk that these agreements may be
breached, and that the remedies available to us may not be adequate. In
addition, our trade secrets and proprietary know-how may otherwise become known
to or be independently discovered by others.

If we fail to adequately manage the size of our business, it could have a
severe negative impact on our financial results or stock price.

Our management believes that in order to be successful we must
appropriately manage the size of our business. This may mean reducing costs and
overhead in certain economic periods, and selectively growing in periods of
economic expansion. In addition, we will be required
to implement operational, financial and management information procedures
and controls that are efficient and appropriate for the size and scope of our
operations. The management skills and systems currently in place may not be
adequate and we may not be able to manage any significant reductions or growth
effectively.

Acquisitions of companies or technologies may result in disruptions to our
business.

24



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As part of our business strategy, we may acquire assets and businesses
principally relating to or complementary to our current operations. We merged
with Visionics in fiscal 2002 and acquired Identicator Technology, Inc.
(Identicator Technology) in fiscal 1999, one company in fiscal 1998 and two
companies in fiscal 1996. We also acquired certain software and source code
assets in October 2002. These and any other acquisitions and/or mergers by
Identix are and will be accompanied by the risks commonly encountered in
acquisitions of companies. These risks include, among other things:



| |  |  | exposure to unknown liabilities of acquired companies;                                                                     
| | - |  | ---------------------------------------------------------------------------------------------------------------------------
|
| |  |  | higher than anticipated acquisition costs and expenses;                                                                    
|
| |  |  | effects of costs and expenses of acquiring and integrating new businesses on our operating results and financial condition;
|
| |  |  | the difficulty and expense of assimilating the operations and personnel of the companies;                                  
|
| |  |  | disruption of our ongoing business;                                                                                        
|
| |  |  | diversion of management time and attention;                                                                                
|
| |  |  | failure to maximize our financial and strategic position by the successful incorporation of acquired technology;           
|
| |  |  | the maintenance of uniform standards, controls, procedures and policies;                                                   
|
| |  |  | loss of key employees and customers as a result of changes in management;                                                  
|
| |  |  | the incurrence of amortization expenses; and                                                                               
|
| |  |  | possible dilution to our stockholders.                                                                                     

In addition, geographic distances may make integration of businesses or
the acquisition of assets more difficult. We may not be successful in
overcoming these risks or any other problems encountered in connection with any
mergers or acquisitions.

If we fail to attract and retain qualified senior executive and key technical
personnel, our business will not be able to expand.

We are dependent on the continued availability of the services of Dr.
Joseph J. Atick, the Companys President and CEO, as well as certain of our
other employees, many of whom are individually key to our future success, and
the availability of new employees to implement our business plans. The market
for skilled employees is highly competitive, especially for employees in
technical fields. Although our compensation programs are intended to attract
and retain the employees required for us to be successful, there can be no
assurance that we will be able to retain the services of all of the key
employees or a sufficient number to execute our plans, nor can there be any
assurances that we will be able to continue to attract new employees as
required.

Our personnel may voluntarily terminate their relationship with us at any
time, and competition for qualified personnel, especially engineers, is
intense. The process of locating additional personnel with the combination of
skills and attributes required to carry out our strategy could be lengthy,
costly and disruptive.

If we lose the services of Dr. Atick or other key personnel, or fail to
replace the services of key personnel who depart, we could experience a severe
negative impact on our financial results and stock price. In addition, there is
intense competition for highly qualified engineering and marketing personnel in
the locations where we principally operate. The loss of the services of any key
engineering, marketing or other personnel or our failure to attract, integrate,
motivate and retain additional key employees could have a material adverse
effect on our business, operating and financial results and stock price.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk.The Companys exposure to market risk for changes in
interest rates relates primarily to the
Companys cash equivalents and lines of credit.The Company does not use
derivative financial instruments. The Companys cash equivalents are invested
in money market accounts with major financial institutions. Due to the short
duration and conservative nature of the Companys cash equivalents, their
carrying value approximates fair market value. The Company has performed an
analysis to assess the potential effect of reasonably possible near-term
changes in interest rates. The effect of such rate changes is not expected to
be material to the Companys results of operations, cash flows or financial
condition.

25



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##### Table of Contents



The Company primarily enters into debt obligations to support general
corporate purposes including working capital requirements and capital
expenditures. The Company is subject to fluctuating interest rates that may
impact, adversely or otherwise, its results of operation or cash flows for its
variable rate lines of credit and cash equivalents.

Foreign Currency Exchange Rate Risk.Certain of the Companys foreign
revenues, cost of revenues and marketing expenses are transacted in local
currencies. As a result, the Companys results of operations and certain
receivables and payables are subject to foreign exchange rate fluctuations. The
Company does not currently hedge against foreign currency rate fluctuations.
Gains and losses from such fluctuations are not material to the Companys
consolidated results of operations or balance sheet.




Item 4. Controls and Procedures

Under the supervision and with the participation of our management,
including our President and Chief Executive Officer and our Chief Financial
Officer, we conducted an evaluation of our disclosure controls and procedures,
as such term is defined under Rule 13a-14(c) promulgated under the Securities
Exchange Act of 1934, as amended within 90 days of the filing date of this
report. Based on their evaluation, our President and Chief Executive Officer
and our Chief Financial Officer concluded that Identix disclosure controls and
procedures are adequate and effective in timely alerting them to material
information required to be included in our periodic SEC reports.

It should be noted that the design of any system of controls is based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions, regardless of how remote. We intend to
review and evaluate the design and effectiveness of our disclosure controls and
procedures on an ongoing basis and, if necessary or appropriate, to improve our
controls and procedures over time and to correct any deficiencies that we may
discover in the future. Our goal in this process is to ensure that our senior
management and board of directors have timely access to all material financial
and non-financial information concerning our consolidated business and
operations. While we believe the present design of our disclosure controls and
procedures is adequate and effective to achieve our goal, future events
affecting our consolidated business and operations may cause us to
significantly modify our disclosure controls and procedures.

There have been no significant changes (including corrective actions with
regard to significant deficiencies or material weaknesses) in our internal
controls or other factors that could significantly affect these controls
subsequent to the date of the evaluation referenced above.

26



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##### Table of Contents
























PART II OTHER INFORMATION

Item 1. Legal Proceedings



| |  | The Company is not party to any material legal proceedings.
| |  | -----------------------------------------------------------

Item 2. Changes in Securities



| |  | None during the quarter ended September 30, 2002.
| |  | -------------------------------------------------

Item 3. Defaults upon Senior Securities



| |  | None.
| |  | -----

Item 4. Submission of Matters to a Vote of Security Holders



| |  | None.
| |  | -----

Item 5. Other Information



| |  | None.
| |  | -----

Item 6. Exhibits and Reports on Form 8-K.



| | (a) |  | Exhibits
| | --- |  | --------

|        |  |                   
|------- |  | ------------------
|Exhibit |  |                   
|Number  |  | Description       
|        |  |                   
|99.1    |  | 906 Certifications

27



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, Identix Incorporated, a corporation
organized and existing under the laws of the State of Delaware, has duly caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Minnetonka, State of Minnesota, on November 14,
2002.

| |  |                                                                    
| |  | -------------------------------------------------------------------
| |  | IDENTIX INCORPORATED                                               
|
| |  | BY:        /s/ Erik E. PruschErik E. Prusch
Chief Financial Officer

28



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##### Table of Contents



CERTIFICATIONS

I, Joseph J. Atick, President and Chief Executive Officer, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Identix
Incorporated (the registrant);                                                                                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                        



| |                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;



| |                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and



| |                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent functions):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weakness in internal controls; and



| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weakness.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |       |  |                                                                         
| |  | ----- |  | ------------------------------------------------------------------------
| |  | By:   |  | /s/ Joseph J. AtickJoseph J. Atick
President and Chief Executive Officer
|
| |  | Date: |  | November 14, 2002                                                       

29



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##### Table of Contents



I, Erik E. Prusch, Chief Financial Officer, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Identix
Incorporated (the registrant);                                                                                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                        



| |                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;



| |                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and



| |                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent functions):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weakness in internal controls; and



| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weakness.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |       |                                                         
| | ----- | --------------------------------------------------------
| | By:   | /s/ Erik E. PruschErik E. Prusch
Chief Financial Officer
|
| | Date: | November 14, 2002                                       

30